>> the goal is not to maximize revenue the goal is to deliver the best possible experience. >> thank you for being here. >> pleasure. >> a lot of fun. >> thank you for being here, too, brian. >> here most of the week. >> tomorrow is the only day you're not. >> where are you going? >> what do you mean? going nowhere. >> join us tomorrow. "squawk on the street" begins right now. ♪ >> good monday morning. welcome to "squawk on the street." i'm carl quintanilla with kelly evan as the new york stock exchange. cramer and faber are off. joining us, dennis berman at the "wall street journal." thanks for coming in. we open the week up with the dow up six consecutive weeks. that's the longest stretch since 2011. best percentage game so far since 2003. ten-year might bounce this week as we have fed speakers on the docket today, tomorrow,

wednesday. pmi 50.5 a two-year high. markets are mostly flat. road map begins with the highest inflow ever for equities. investors pouring $40 billion into stock funds in july. as we said, three key fed speech this week that could shake the markets. >> a big win for apple in its battle with samsung. the obama administration vetoing a ban on apple products. share of samsung are falling in asia. >> tv blackout, battle between time warner cable and cbs show nothing signs of letting up. the terror threat overseas. many u.s. embassies stay closed now until august 10th. a live report from nbc's pete williams. first up, if you didn't see it, u.s. equity funds saw a record inflow in july. according to trim tabs funds saw $40.3 billion coming in last month while bond funds saw the fourth highest outflow on record. david seeburg at cowan. good monday morning to you.

>> good morning. >> david, is this the beginning of something new? >> it seems to be. i mean, $40 billion in july, amazing. still a ton of cash on the sidelines. there's about $9.5 trillion in xhrgs bank deposit and money mark accounts, companies obviously corporate balance sheets reflecting cash. m&a starting to pick up it's the beginning of a rotation that we expect to take equities higher. >> peter, how do you read things here. >> s&p gone from 666 to 1700 without the retail investor. retail money's coming in, that's going to push us higher. remember for every buyer there's a seller. for every 100 shares bought, there's 100 shares sold. it's the aggressiveness of the buyer. if the money comes in there's an equal amount of sellers it's not going to matter. the market had a tremendous run over the past couple of years without retail investor.

i don't use that as a determinant of where the market goes from here. >> david and peter, it seems that the fed is pushing people into stocks. when you look at revenue growth, earnings for the last quarter, any real substantive reason at this level to get into stocks other than the fed pushing it? >> it's interesting. i mean i look at the way the market changed a bit. it's more of a stock-specific market. you know versus a sector-driven or overall market rally. people, hedge funds, individual investors looking at stocks as independent entity and they're taking them higher. look at our desk in particular, a ton of hedge fund activity. 60/40 hedge funds on our desk. correlation is extremely low. and it just seems to me that the hedge funds seem to be chasing performance. a lot of individuals trying to find winners. and, yeah, i think earnings in general have been better across the board. >> david, citi's got a note out this week that argues the

collapse and correlation you're talking about is dangerous in that traders stop paying attention to big mac crow pictures and historically, when correlation between names breaks down, that there is the potential for a correction. is that misguided? >> no question about it. i agree with that. it's more of a hedge fund positive, standser for the hedge funds. gives them an opportunity to catch up to the tape and find winners, make bets on winners and benefit from it. i read the citi article and i agree with it. from a theme perspective, it's viewed as a little bit of a negative. in general. >> peter, what's most important this week? we've got a couple of fed speakers. we've got the ism services data out in a little bit. what do you think is going to take people's attention as we move away from the friday jobs report? >> the only thing that matter is this week, the next couple of months and year-end is what the fed does. we can discuss the economic data, discuss the earnings but

whether good or bad the market didn't care because it's focuses on free money injected into the financial system by the federal reserve. it comes down to what they do in september for the next couple of months. >> i was going to say, a lot of people over the weekend, it's interesting, you see them working through data, not sure where things are shaking out but saying the fed's going to taper in september. the september taper is divorced from how the macro picture evolves over the coming weeks, peter? >> well, if we are around estimates, i think they'll taper. if we get a deviation from the downside, they can pull back. the slight miss on friday's payroll number i don't think was enough to move the needle. i think the fed wants to taper. they're trying to find excuses to do it. but it comes down to also the bond market's response to that. the bond market hasn't liked what it's seen in terms of the possibility of tapering. the bond market's already tightened. stock market is ignoring it. but the fed wants to proceed

before bernanke leaves office. >> david, one last point here on seasonality. trading in august is tough. we know there are some people this week and this month who are going to be on vacation. if we digest 1700 here with the relative degree of success, does that force traders to trade into the month, trade into labor day rather than completely divorcing themselves from the news flow? there yeah, i actually think it does. i mean, in just to sort of back up a bit and talk about this being a fed-only driven market i disagree with that entirely. i look at m&a that we've seen. these companies see something, value in the market. we saw $20 billion of friendly m&a last week. companies are looking at that and saying there's value here and we're going to make bets on that. they still have a lot of cash. we're going to continue to see that. trading into the end of the month, absolutely see volume pick up a bit. different than we've historically seen in august. again, hedge funds getting more active. the flows in our desk have been

bigger. and i think in general, i see a lot of very positive signs from m&a, from the amount of money on the sidelines, it's starting to be infused into the market. we saw the u.s. equity fund data, it's very strong. i believe we'll continue to trend higher. >> david and peter, sharing their thoughts on monday morning. thanks to the both of you. news involving big tech. the white house has reverses an international trade commission decision that banned the sale of certain older apple iphones and ipads. the original ruling said those products violated samsung patents as a result of the decision, samsung lost $1 billion in market cap overnight. microsoft offering $100 discount on hit tablet coming after the company took $900 million write-down on unsold inventory. dennis, you guys write this morning about the implications of this decision on obama

overrulingisting itc. >> the rollback with political overlay of apple as a great american jobs innovator if you remember the hearing in front of capitol hill with tim cook. >> you're saying it might not have happened if it had been khoch brothers. >> steve jobs, real job the government sided with apple. long term this pushes the companies to come to some sort of negotiated settlement. as we've seen and reported in the journal over the last few weeks each one has won one, lost one, and they have different takes when it comes to their settlement negotiations. i think over the next few months or the next year you will see some negotiated settlement. as you recall, samsung produces a number of components for apple. this is another thing that put the two together. >> talking about older models. everyone's all consumed with newer models.

more rumors about september 20, i believe the date for a 5s, for a 6 on the iphone. that speculation's going to heat up as we get closer and closer. >> i think the ruling, as we move forward in tech space, it does put a chill on the aggressive patent squabbling we've seen and from companies big and small. it does sort of like throw a wrench in the general understanding and that's why it's important for people to pay attention to it. >> the interesting thing, people are criticizing itc's role in the first place, saying it's being adjudicated in a way that wasn't in the best interest of american business, if you wanted to call it that. not that that's necessarily the deciding factor here. >> right. >> the journal on the editorial side had been one of the places calling for the obama administration to overrule the decision, saying, come on, guys. >> right. >> it does seem to be almost nakedly political move. but the -- a lot of people are saying that's not necessarily a bad thing. >> right. interesting to see how the court

evolves. it's sort of been a rubber stamp for so many years. whether it takes a more bite in the stance in the future is something to think about. >> on the higher end surface, kelly said 100 buck, cut price on rt. it's through august 29th. plenty of time now -- >> i remember being on air with you and i said, have you seen anyone in the cafe, in an airport, on a train, using a microsoft tablet? i don't think you could answer that. >> no, never seen that. >> after posing that question i looked with an eagle eye to find people using those tablets. i can't find them. i think the discount is somewhat meaningless, 800 to $700 tablet. why pay $700 when you get the latest ipad for $400, $500. >> the nexus, getting good reviews. if microsoft says we have too much inventory, go under $500? >> $100. >> is it that bad?

competition is so acute if they're not the best, they're going to have to be that cheap? >> we know about tablet -- carl is nodding -- 80% of tablet traffic is from ipads the rest from android. they wrote down $900 billion. $100, kelly. >> not enough. that's what i'm hearing from dkb. >> on the more serious front, the state department, as you might know by now, extending closings of u.s. embassies in the face of a serious and credible threat against american interests overseas. nbc news' pete williams with latest on that developing story. >> reporter: these are embassies in 19 countries that the u.s. says they're going to remain closed through this saturday. now the state department says many would have been closed for several days this week anyway because of the end of ramadan and the holiday associated with that. but they will also reopen

embassies in nine countries that were closed on sunday, normally that would be a day when they'd be opening, beginning 0 the work week in the muslim world and that includes kabul and baghdad. you still have this concentration of u.s. embassies and consulates in north africa and the middle east, that's where this threat is supposedly concentrated. though, carl, they candidly say they don't know precisely where the attack would take place, what kind of attack it would be, how it would be done, precisely when. there's a lot they don't know and that's why they're taking all of these precautions. it's not just the u.s. both the uk and france also say they will keep their embassy in yemen closed through thursday at least. >> pete, has any of this translated into more worry or concern about threats to the homeland itself? >> reporter: not really. i mean i think they're candid in saying they can't rule out a possible attack on the homeland or flights to the u.s. from overseas which have been favorite targets of al qaeda in

the past. but the gravity or the central core of information that they have seems to suggest that the attack would be to u.s. or western interests in yemen or north africa or the middle east. that seems to be the best educated guess about this. >> pete williams in washington, thanks for the guidance on that. good to see you. >> okay. when we come back, time warner cable/cbs shut down showdown heats up. two well-known publications sold. eye opening comments from cablevision's dolan. one more look at futures starting off with flattish action. more to come. earnings, econ data. live from post nine when we return. [ male announcer ] come to the lexus golden opportunity sales event and choose from one of five lexus hybrids that's right for you,

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the 11th hour but people, if you're in new york and turn to channel 2, do you get stars? >> i think so, people were saying. the answer is i don't know. how many people are glued to the channels as they have been in the past? >> it's awfully convenient it's happening in august for both side. when football season comes around -- >> there was a game last night. >> that's when it matters. it's about football. you can bet, i'll bet you they have this resolved before that big first nfl game. >> those who wanted to see tiger woods play over the weekend were out, watching him win for bridgestone. >> don't you think it's another reminder you as viewer, with all due respect to the great products put on cable television, maybe you want to cut your cord, live without it. >> jim dolan suggesting what the future is between broadband and linear television. unbelievable that you even got him on the record. >> tireless work by reporters. years since jim dolan talked. what he said was really

important. he acknowledged that the cable system as it is currently constituted will not stand. he calls the cable business living in a bubble of el selling packages of channels to consumers they do not no long term, broadband will overtake the system and that's why he's investing in that kind of content delivery. >> i was looking here, because you know all of the trends come together at the same time, you have chrome cast, what that is doing, the impact on the industry as well. >> and you put that together with ario, those guys with the work around the law. >> chrome cast. >> chrome cast. you could spend lots of hours amusing yourself without paying that cable bill. >> a lot of m&a over the weekend, not only with "newswee "newsweek," tina brown facing about the challenges and trying to turn that entity around. also the "boston globe" sold by the new york times. >> $70 million. i think that went for a billion bought in the '90s by "the new

york times" company. life moves on. as i like to think about it, used to be a time books were made by scrolls and they became books and scrollmakers were in trouble. the scrollmakers are in trouble. you could go through ten digital properties worth more than $70 million today. >> first of all the scroller had it right if you think the way digital devices are scrolling through. when it comes to the "boston globe," aren't we learning that content still matters and people will pay for it and the model can be sustainable in the digital world? it's just that it creates winners and losers. you guys are looking -- >> the journal's got advantage because it started that way from the beginning. the model says that free or close to free -- >> no, no. anderson days are over. don't you think the trend is favoring the journal model. >> leo hindry said content is

king but the king changes every day. >> true. >> you have to acknowledge the great work the "boston globe" did due when it came to the marathon bombing, that was a public service. that's a risk of society, when we go down the line, no one covering things on a ground basis. >> if they were more aggressive, if they or "the new york times" company -- i don't know what the better option would have been but they try to monetize better, other properties, the economists have managed to do it better. is that the real lesson here? >> i think the real lesson here that is the local advertising dollar has gone completely away from the newspaper and has gone to yelp, google, facebook, twitter. that's where the money is. i'm excited to see twitter revolution wednesday to talk about that. >> we'll talk more about it before wednesday. when we come back, life without facebook, twitter linked in. meet a technology writer who is quitting social media for a month for the first time in a

decade. how is she coping so far? one more look at futures. let's get the opening bell open and over with. start the trading session. futu futures down 28. geoff: i'm the kind of guy who doesn't like being sold to. the last thing i want is to feel like someone is giving me a sales pitch, especially when it comes to my investments. you want a broker you can trust. a lot of guys at the other firms seemed more focused on selling than their clients. that's why i stopped working at my old brokerage and became a financial consultant with charles schwab. avo: what kind of financial consultant are you looking for? talk to us today.

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of hong kong's dragon boat festival. we are about seven minutes to before the opening bell. a look at what's on traders' radar. >> hoping for some volatility to be worth coming in, paying money for a boat fare and a clean shirt. other than that, the macro, take a look at macro effect. record dollars flow into equity funds and etfs. most traders looking for a pullback in the market to fight that inflow has been a painful trade. >> saying that the pan trade has caught people on the short side of the market? >> yeah. the naturalen stink for trade to short the market. rule one, never short a dull tape. you do a great job putting shine on it. intraday, it's a brutal tape to trade. >> help from the ribbon dancers. >> yeah. >> but yet you have the fed and all of the fed governors making

statements. >> absolutely. >> that's enough, right? >> take a look, see what mr. fisher can do. he adds fireworks and evans tomorrow and close on wednesday. that will keep some activity at watching the tape, or twitter, who can say what. expectation is that tapering will take effect. i'm still of the school it happens in september. so that being said, the market has to price in the tapering and how exactly that does tighten natural markets though the fed says that's not how the tool is used. the fact of the matter is tapering does create tightening. >> what do you think accounts for inflows? is this -- are these kitchen table mom and mop conversations or hedge funds fridaying to catch up? >> originally mom and pop. and the hedge funds that missed, you have to scratch your head wondering why they've missed this. >> sure. >> when rates go up, the value of the bonds, principal holdings go down and can jamie dimon and the big banks to see what happened to their portfolios.

>> anything in particular you're watching today? >> i think, as a group, we'll keep an eye on the financials again because of what's happening in the ten-year. the tech stocks with some of the chips in particular. the tech seems to be where the more hotter money, so to speak, has been going to work as opposed to the pure flows into etfs. >> ben willis, thank you. a couple of things to keep an eye on as we're a couple of minutes away from the opening bell. >> after six consecutive weeks up, will this be another record setting week for the markets? brace yourself for the kickoff. opening bell moments away. for over 60,000 california foster children, having necessary school supplies can mean the difference between success and failure.

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but he's not. ♪ he's an architect with two kids and a mortgage. luckily, he found someone who gave him a fresh perspective on his portfolio. and with some planning and effort, hopefully bob can retire at a more appropriate age. it's not rocket science. it's just common sense. from td ameritrade. into you're watching cnbc "squawk on the street." opening bell in just about 30 seconds or so. a lot going on. the dow's up six in consecutive weeks, the longest stretch since early 2011. up almost 20% this year which makes it the best percentage gain since 2003. and if we get to 25, you've got

to go back to '96, to put into perspective where we are so far. >> talking about earlier, if it doesn't feel real, look at corporate profits in particular it doesn't feel earned. >> profitability, you're right. there's a disconnect. there's the opening bell. look at s&p at top of your screen. at the big board, this is a nice treat. 23rd new york hong kong dagrago boat festival. you've seen a lot of red ribbons. >> i missed the dragon. i had no idea they did it here. i'll catch some of it. >> you're right. over at nasdaq, focusing on therapeutics for blood clots and blood cancers. a look at early movers. downgrades today. a trio of them. brinker down to a hold, saying no longer trades at a discount. cuts to market perform.

jeffries cutting kraft on valuation but also in their view increased competition. favorite line from the report this morning is, mac and cheese is a crowded space. >> yes. >> 2012, but what's trading at a discount these days, not much. >> yeah. >> energy names, maybe. >> kraft still has a 3.5% dividend, peer group leader, one reason to stay in the name. qualcomm, cut to neutral. concerns about smalling smartphone demand at high end. take multiple from 16 to a 15 and that takes the target from 71 down to 67. so typical monday action, dennis, on the research front. >> yes, i'd say so. >> mergers, there's not a lot of -- >> there were a lot last week. >> still a pause. >> we'll keep our eye on berkshire hathaway. if you missed friday, why does he post friday? profit up 46%. revenue up 16%.

talk about environment where companies have had a hard time posting on the top line. buffett does it. big investment game, big gain from derivatives. >> if you look at aig stock, an indicator where insurance profits are going. don't forget, the great railroad business that buffett has now. >> yes, burlington northern. there's the chart. as josh brown pointed out this morning, for those who were -- thought this bet on america, on an american recovery was misguided -- >> or naive. >> slammed it in their face. stock's up 31% this year. >> to go back to the point as well, book value which buffett likes to use, up 2% for the quarter. in a period where travelers, some of the other big insurance competitors suffered because of their exposure to what was happening in the bond market. buffett what does he do? he buys companies. concentrated stakes in equities which did well in the second quarter and that helped

outperform a the lot of his peers. >> buy a railroad, utility company in nevada hoping on recovery from recession there. big mac cr macro bets. >> tyson food, 69 cents, beat business 9 cents. revenue a beat. chicken and beef volume, up 4%, hard to do in this in economy. >> especially with beef prices the way they are. >> interesting you mention that. chicken feed costs up $105 million in the quart, less than 335 in the first half. the thinking is, they're looking at commodity costs coming down, even as pricing power continues to be strong and next year you might see fatter margins on the likes of the big chicken and pork producers. >> i would not expect that revenue growth given where the average person, nonwarren buffetts. >> if you look at beef prices, up substantially year on year. volume may not be as good as suggested. >> facebook friday closed above 38 for the second time in its

history, first time since its debut may of last year. it's up more than a percent today, 38.56, psychologically, dennis, for some reason, for a while, not for ever, the 38 marker will continue -- >> it's a classic note of behavioral economics, anchoring price 38. if we said back in may 2012, it's trading at 38.50 in august of 2013, that is a success? we would say no. >> yet -- >> we would say no, right? >> yes. the way in which friday, facebook holding up well early in the day after the market was suffering after the payrolls report, people looking to that as a barometer, facebook, despite everything it's been through, playing that role? >> the crazier stock, linkedin, up 11%, i don't know the multiple on that. something like 250 -- >> 250, something like that. >> facebook has an event i think tuesday night, if i'm not mistake. anything -- any event they have

right now holds the promise in the eyes of some of revenue generation. that would be a story to watch. apple, holding in at 465. had the best month in july, i think, since middle of last year, if i recall correctly. >> even 2012. below 400 not long ago. >> people watching to see if it can hold above 460. >> when the president's got your back, it helps. >> ouch. ouch. let's get to bob pisani, what happens moving on the floor. >> good morning. and talking to traders over the weekend, the uls cynicism about cynicism in august in addition to light volumes. august is the worst month for trading now. it's been that way for a good 20 years. in the early part of the century, when harvesting was big, farming, this was a good month. but it hasn't been for a very long time. of course, today, the second anniversary of that standard and poor's downgrade in the outlook for u.s. debt, what, two years

ago. remember when that happened? the close, it was a friday after the close, it was a lousy week for the markets. a lot of worries about europe. the s&p was down about 6 or 7% that week. friday, s&p came out with their announcement. monday morning the s&p dropped another 6%. so we dropped almost 13% in the space of about six trading days this week two years ago and people remember that. it's i very different world. friday, the debt downgrade fears faded, there's not as much concern about a euro meltdown. monetary policy, this is where we are right now, accommodative, number one. central banks around the world from u.s. to europe to japan abovish. macro environment quiter than two years ago. earnings are fashg n fair, not . the above factors argue stocks are preferable. did you see what happened in mmi numbers in europe?

uk had best numbers going back to december 2006. morin enyafrp yafrp enthusiasm about the uk. still either way on china, very iffy. a slower economic environment there. did you see what was go on with numbers around pc sales? idc estimated pc spending going to drop 7.2% this year. they said spending growth worldwide on i.t. will be up 4.6% down from the previous forecast of 4.9. numbers are coming down on concerns about slower china overall. the best stocks, it is a stock pickers market, are overbought now. there is something to this idea. look at qualcomm, the stock everybody loves, everybody loves it because of its smartphone presence. great note from piper jaffray, downgrading it because high-end smartphone demand is

decelerating a bit largely on on the china issue. a smart note. i looked at it, noted there were similar comments earlier. royalty revenue growth lower for qualcomm if the high-end sales drop. this makes some sense. everybody loves qualcomm. some 32 analysts following it. all by five have a buy recommendation on it. i think there's one sell out there. so 90% of the street, 85% of the street, a buy recommendation on it. i think this is a very interesting call. the kind of thing you want to look for right now when a stock like that starts seeing analysts saying, not on valuation but concerns that the revenue growth might not be as strong, that's the kind of thing you want to pay attention to. >> for the top line, bob, the services pmi, u.s. reading comes out in 20 minutes' time. in the meantime, let's check in with seema mody. >> apple is a big story in tech land after the white house overturned the ban on the sale of some of apple's older iphones

and ipad. shares of apple up on the day. shares of apple's top competitor, samsung, in response, moving lower, losing $1 billion in market value overnight when it traded in south korea. semiconductor stocks, qualcomm downgraded to neutral. the analysts citing reduced demand for high-end smartphone. the semiconductor industry association today announced that worldwide sales of semiconductors in the second quarter reached 74.7 billion, up 6% from the first quarter. this marks the largest quarterly increase in three years, thanks to strong sales in the americas. data out on the tablet space. idc reporting that worldwide tablet shipments experienced a decline as total volumes fell 9.7% from the first quarter. competition, saturation in different product verticals, whether it be tablets or smartphones, pcs, that seems to

be a major challenge for tech corporations in general. >> thank you. shift over to bonds and the dollar. rick santelli at the cme group in chicago. hope you had a good weekend, rick. >> absolutely. when i looked at the treasury market a couple of things need to be pointed out. first of all, after the employment data and considering that it is august, i noticed that volatility, not the price fluctuation, the option metric, implied volatility, crushed. what does that mean in english? means we're probably not going to see the type of movement in options, therefore probably not the type of movement we've seen of late in interest rates, as summer, holidays and of course looking to big eventses like the september elections in germany. look at entra day 24-hour, two-day chart of ten, one thing jumps out at you, a big drop-off in rates after the weaker than expected employment. but that's made a big deal. let's put it in proper context.

the 5th of july high yield close in tens going back two years to 2.74. the last unemployment report. it was as strong as this report is weak. let's go to the day before. look at charts from the 3rd of july. tens, the penalty of rates going up on a strong was stronger to give back on the weak report. five-year, there's curve imcomplications meaning that the price has risen further somewhere faster since that july 5th employment report. so the curve has steepened. the same said for the bund in the european markets. look at continue-year bund. yield is over 95 basis points lower than ours than it was he 100 basis points friday. it's near where it was based on the last employment report. look at five-year booun, no major curve implications. the next one, the dollar index. let's look at dollar index. look how much weaker the dollar index is than the strong labor report on the 5th of july. we need to keep in proper

perspective the residual idea of stubborn higher interest rates. kelly, back to you. >> will do. thank you, rick santelli. check out the action in commodities with sharon epperson. >> looking at gold right now. gold prices are still above 1300 an ounce but seeing gold slip a bit. after the latest jobs report, traders are waiting for the next data point to watch. cutting bullish bets and looking at shorts that have risen 7% in the last -- the biggest increase in the last six weeks and that was as of last week. taking a look at what's happening in the exchange-traded fund market with gold, that's a key determinant perhaps where prices go. looking at gld in particular and seeing that that touched the lowest level in four weeks in terms of holdings last week. we'll be watching that carefully. if it dips below 1300 in term of price, we could see a decline in etf holdings. oil as well, we are seeing

greater output from libya and the north sea and that is putting some pressure on oil prices. we have brent crude and wti futures lower on the session right now. traders are are watching what is happening in libbia, in particular, to see where oil prices may go from here. >> speaking of which, the transports have been doing more than just chugging along. coming off their best week in six months. how does that happen with the cost of fuel around the world? we'll talk about that after a break. also, outperforming s&p this year, we'll explore the best ways to ride the transport to profits as we go to break with the dow down 53 points. take a look at the early movers. [ male announcer ] come to the golden opportunity sales event to experience the precision handling of the lexus performance vehicles,

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it's time to do everything better than before. the new blackberry q10. it's time. and experience the connectivity of the available lexus enform, including the es and rx. ♪ this is the pursuit of perfection. dow transports coming off their best week in six months top break down some of the big winners in the sector, a transportation analyst over at barclays. good morning to you. >> good morning, carl. >> explain what's going on. i mean is this about shipping

volumes? why is this happening in the face of what we know, short term, rising fuel costs? >> i tell you what, when we look at fundamental data, the u.s. and europe, consumer base is not growing ran idly as everyone knows. and that's the end driver to a lot of transportation demand. across our universe from a fundamental perspective we don't see an inflection point positively or negatively in date fan what we're seeing is investors looking for laggard stocks with decent yields and inexpensive valuations and transports fit the bill. the rally has more to do with the market than transportation fundamental. >> is this rally evenly distributed? is there a sense that it's the likes of the rails and some of the freight companies, et cetera, or are there names which are doing a lot of the heavy lifting for everyone else? >> well, really when i look across the large cap names here, it's the u.s. and canadian railroads putting in the work

this year. i think for good reason they've been seeing the better top line performance from things like shale energy development, chemical franchises in the gulf coast, trade with mexico. all of those things outperforming the broader economy. railroads leading that rally. >> and that's what's so interesting, because i wonder if we haven't seen an inflection point where higher fuel costs used to be a headwind for the stocks and now a tail weekend because they're transporting oil more so than necessarily paying to operate on or something to that effect. >> that's right. it's not only the crude oil that they're directly moving but railroads, by in general, the cheapest mode of transportation. as fuel costs go higher the differential between a rail and truck goes higher. the railroads see influx of demand in higher oil prices. >> talk about that, it's near a 52-week high, they've fessed up to their problems with next day air deliverly. >> i think it fits the criteria

i talked about earlier, people are looking for a laggard stock with a cheap multiple. fedex lagged the broader market since 2006. it's clear vests are understand there are challenges in the express air business. in a mark inflating this has been left behind. management has plans to restructure some businesses. we're not sure it's going far enough but the market's saying it's a shot that we can get some improvement from the management team. i think it's, again, much more about a cheap stock than fundamentals that are getting better. >> i'm not sure how closely you cover burlington post-buffett, to what degree do you think that drove berkshire's quarter? if you had to rate some of the rails at least on a spectrum, would they be the best performing? >> i have looked at the latest results last quarter. burlington's performance has been tracking in leine with unin

pacific, which is our top pick in the space. burlington northern, union pacific sitting on top of the shale regions and energy plays and chemical markets has led to good top line and bottom line expansion for both companies. >> provocative point what it says about the sector and the market, brandon. thank you for your time. since marisa meyer became the ceo of yahoo! the company has made, get this, two dozen acquisitions. is this money well spent? we'll look at her shopping spree in a moment. and this will be your premium right here. sorry to interrupt, i just want to say, i combined home and auto with state farm, saved 760 bucks.

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♪ marissa meyer at yahoo on quite april spending spree. rock melt announced on friday. is her strategy working for the company? dennis has a lot of thoughts. working theory she's buying time. >> agree. make it to make it, faking's

going well. >> faking it? >> top line growth foryahoo a f to negative. google's up almost 25% top line, facebook higher than that. you see companies in the spashgs there's organic shift online. yahoo!'s not a part of that. they're faking it, and by that i mean faking it to get engineers, us talking about it. she's on tv. she's on magazine covers. let get activity and energy going and maybe something will happen there you want to retain people, right? acquire smart people. appears to be working some of the metrics they've put out. any of this happening with ali baba? >> the stock price? >> no. as it gets ready for its huge ipo and the performance stellar, that's raised yahoo!'s boat. if you take ali baba out of it there isn't anything that recommends yahoo! has organic

place. >> globe's exit perfectly timed for him. >> i think so. if i were marissa meyer i'd be doing the exact same thing. prior to that it had a string of failed ceos, no strategy ex-direction. the problem going ford, ifward,i had to ask you describe what yahoo! is or does, can you do that? >> a search engine. >> portal. >> stuck in 1999. >> a giant, you can't turn your head on how many users. >> the traffic is certainly there but the revenue growth and act to get money out of the traffic base has not shown itself. i think you have to give meyer time to make that work. so far, i'd say it's more in the faking it part than the making it part. >> we all remember the tumbler acquisition, one she's made so far, too many? integration a concern at some point or not? >> a lot of these are small

teams, five to continten-person. most of them are probably make sense. more than yahoo!'s ever done, it's an na inquisitive company. >> microsoft offering $100 discounts on surface pro. cuts up to 30% on the rt. this morning's squawk on the tweet. for get price cuts if microsoft wants people to buy the surface, it needs to what? tweet us. we'll get your responses late on in the morning. >> that's not fair. >> good ones -- >> that's not nice. >> nobody ever accused us of being nice, i tell you that. cnbc's documentary "twitter revolution" premieres wednesday august 7th, 9:00 p.m. eastern time there you had something to do with that one. >> yes. we'll talk about that tomorrow. a good project. >> simon hobbs joins us with a look at what's coming up in the next hour of "squawk on the street." >> see you tomorrow, i believe.

>> sounds good. >> good morning. in the next hour of the program, we're getting a key reading on what the economy might do in the second half of the year. we'll enter the furious debate that's raging about what the white house veto on apple/samsung case means moving forward. cold turkey on social media, how bad can it be? jesse hemple will join us live. [ male announcer ] here's a word you should keep in mind. unbiased. some brokerage firms are. but way too many aren't. why? because selling their funds makes them more money. which makes you wonder -- isn't that a conflict? search "proprietary mutual funds." yikes! then go to e-trade. we've got over 8,000 mutual funds, and not one of them has our name on it. we're in the business of finding the right investments for you. e-trade. less for us. more for you. the fund's prospectus contains its investment objectives, risks, charges, expenses, and other important information and should be read and considered carefully before investing. for a current prospectus, visit etrade.com/mutualfunds. since aflac is helping with his expenses while he can't work,

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welcome back to "squawk on the street." we are awaiting the july read on ism, nonmanufacturing, and that is, of course, the service sector. 56.0, much stronger than we were looking at. now, let's look at this in our wait, 52.2 has doob yus honor of being 3.5 year low. jump up to 56 equals february of this year at 56. we have to go back, let me see, to february of last year to find a higher read at 56.1. so it seems though february is the month to pay the most attention to. ism, nonmanufacturing moves in the direction that many in other countries have moved towards.

let's dig in. if the employment scene is important to you, that move down from 54.7 to 53.2 on this report. if you think new ors is your cup of tea, that moved up smartly from 50.8 to 57.7. somewhat mixed but the headline stronger. back to you. >> all right. rick santelli, thank you. more from bill stone, chief investment strategist with pnc asset management. good morning. >> good morning. thanks for joining us. with 56 crossing the tape it rounds out what overnight has been a series of stronger reads for the service sector. surprised that the market's not positive in response? >> well, i think part of it is i do think you have to say we've had a heck of a run in this market and a lot of it has been based on the fact that, frankly, i think the market was expecting this second half, the economic growth, and earnings as well, to be better in the second half. so i think it's a bit of we needed that to come in to keep

what we've got, not that i don't think it's good news but i think that's part of the issue as well. >> right. to some extent all of this gets priced in and it's a downside surprise that stings more. you think that's what happened friday? despite the jobs report we did close at record highs. >> yeah. it's a tough one abo. a lot of people thought of the gold did locks scenario, it had to push the fed to taper quicker. some might say we keep pushing it off. we're still saying september but it could be pushed off till december for the tapering. i guess i'd say better sooner than later because sooner means that they think the data's coming in better. i think that is part of it. i think the or side is, you know, bonds are continuing to, and the market knows, not very attractive, even at rates having come up a bit. >> so, is september your baseline? do you think we have to get a real big deviation in the data

for that time line to move significantly off? >> i do -- i don't know that we have to get a big -- i don't think we need to get a big deviation where we're headed at the moment. i think that's -- i think they'd like to start it, frankly, in september. it doesn't mean that they, you know, cut it off completely or something in terms of the tapering. but at least get it started and then they can move it around as they wish in terms of speed it up, if unemployment continues to move down or you know slow it down a little bit if we get some backups or slower data. >> bill, good morning. >> good morning. >> you are one of the most bullish people on wall street. you had an expectation friday on the jobs report that we get to 5,000. you were disappointed. >> yes. >> what is the bull case for the rebound and the shape of the rebound in the second half of the year. >> look at employment data, year on year rate accelerated 2.3

million for payrolls, the strongest now since march of 2012. tax receipts are healthy. jobless claims making new lows. seeing purchasing manager indices improve. economy's not great. i make that point. people are too bearish. this equity market continues and we're going it see yields go higher. >> what point, i mean a lot of people want to know, when in the second half of the year is that likely to come? when will rates move? when will the dollar move? what will the impact been the stock market? >> most movement in rates has occurred this year. >> that's it? >> rates will go higher, maybe to 275 to 3%. then they'll make a next leg higher next year, a step-like function. in terms of the economy, what happens with i sequester? it seems to me that that is moderating. combination of less government drag combined with stronger housing market and i know that the job numbers were d disappointing friday, but income is still there. tax receipts up 5% year on year.

the economy gets better. >> you know, a big question is where does everybody else think we are, therefore, where will the money flow? piper jaffray raised s&p target to end of the year to 1850. that's 8% higher than where they are. they make the argument investor sentiment is tepid at the moment because people do not believe the economy can stand on its on without the fed and the fed is likely to be slower in pulling out because it's also concerned we might go book into recession. >> that's exactly right. the problem with that analysis the fed cannot be slow in removing accommodation and when they tighten, tighten gradually. they may be slow. keep accommodation aggressive for a while. that will push people into risk assets. >> qe or interest rates will be low. >> interest rates will be low. i believe they taper in september. we can do a mini taper or change this threshold. i think the hurdle for september tapering is lower than people

think. that doesn't mean they're raising rates or pulling back qe dramatically. this is a slowdown in the pace of extraordinary easing. >> i wonder, just, bill to get back to the point, about what's priced in, so we start to look into the second half of the year. we've been looking at this piece making rounds in barron's over the weekend where david levy's talking, people aren't taking seriously enough the disinflation on the economy, structural weaknesses we're working through and you can see the ten-year back down to 1%. the u.s. is still in a long, dran out period of trying to get over the effects of the 2000 crisis? >>s that a tough one. i don't anticipate we'll see the ten-year at 1%. i think like everybody, i'm worried about the downside risk. we would be on the case of being more positive than others in saying there are some good things going on in the economy. we think, you know, it's no

longer quite as fragile as i think some people would have you believe. so i do think you probably need to think about it more in terms of the risk of higher rates and higher rates because you're seeing better economic growth, not -- that's a good reason for higher rates. >> look, one quick point on that, we do have this issue, as we face every year now at this point about the debt ceiling, congress is away, doesn't look like a near-term resolution in sight. are we strong enough to handle that headwind again? >> you know, i think we've done it a couple of times already. so i do think we will, you know, it's more worrisome in the sense with the markets up with the highs, you know, i think you raise the risk just that you know the market gets more concerned about it because of where you are. but i don't think it really derails because i actually doesn't think, when push comes to shove, they'll end up shutting down the government. >> we shall see. bill, joe, thank you very much

for joining us. we'll follow the debt ceiling negotiations, just as we have every other time. >> bearish today, miss evans? i'm -- >> monday morning, come on. >> i know. feels like we're having the same old debates about the same old topics. >> you need to go out to lunch with levorneau. >> last week we touched 2.7%. >> one of the worst -- >> i was watching that. >> 2. 7, oh. >> that got my attention. i see we're back down this morning. we'll see what happens. >> thank you. >> goldman sachs hit with a class-action lawsuit over aluminum storage methods. kate kelly on a huge story moving forward. >> reporter: less than a week after goldman president on our air defending his firm's metal storage business, accused of

exacerbating getting aluminum out of warehouses. in a lawsuit filed friday a michigan manufactu michigan-based company, accuses goldman and the london metal exchange which sets the rules for warehouses like goldman's of anti-competitive and monopolistic behavior in the warehousing market in connection with aluminum prices which resulted in inflating prices of aluminum and threatening worker lay-offs at aluminum-dependent manufacturers. the suit describes goldman as having a master of the universe investment bank mentality. plaintiffs seeking class action status and jury trial. goldman denies the charges and intends to contest it. hong kong stock exchange which owns the metal exchange in london says it is seeking legal advice in relation to the proceedings. regardless of how the sue is resolved it's another black eye for the commodity business of the u.s. banks these days.

goldman can hang tonight the metal storage company until 2020. other commodities holdings at goldman and other banks may be under scrutiny thanks to regulatory violations in various places and legislative deadlines looming in september. jpmorgan opted to sell its physical commodities business or will seek to, and, carl it remains uncertain what morgan stanley, which flirted over the years wthdith a similar sale bu not acted, will do. >> every desk gets its moment in the spotlight. kate kelly talking commodities. the obama white house in the apple/samsung battle. a big win for apple. when you've got 200 million people who use twitter without paying accent, how does the social media site make money? we'll talk about that when "squawk on the street" returns. ♪

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the dow was down 72. now down 36. let's get josh lipton. >> watching facebook, in green this morning, trading above 39 bucks setting a new 52-week high. of course the run there has been fast and furious. remember, it was at 17.55 back in september. but now, up some 50% since reporting earnings on july 24th. back to you. >> thank you, josh. it's a good day for apple, not

so much for samsung after the obama administration overturned the u.s. international trade commission's decision to ban the sale of older iphones and ipads. it the first time the white house has used a veto of this kind in over 25 years. there's now a furious debate about what the decision actually means. chris is an intellectual property attorney. he joins us from chicago. good morning. >> good morning. >> were you surprised by this move by the white house? >> well, certainly remarkable event in a remarkable and continuing saga. but as far as being surprised, i wasn't. the day that the order came down, 60 days ago, i was commenting that i thought this was the sort of unique set of facts where there was a chance, a chance, that the president might invoke this unique ability and remedy. >> what is that? is it about the fact that we're talking about what they call standard essential patterns here? both the doj and the patent

office itself said that in these cases, for example, whether you can connect a device to wireless network, old fashioned patterns if you like standard patents you shouldn't have bans on that basis, that is the deal? >> indeed. the case and the matter here is surrounding a standard essential patent. the patent involved implicates the interoperatibility of the communication devices. in other words, how a smartphone connects to a network. so you want that as consumers, as a society, we want that ability so we do have interoperatibility between a device be an apple or samsung device. the issue is, was there a game of holdup, in other words, was samsung holding up the competitors here, apple, or was apple playing hold out and refusing to license the patent? the end, it turns out the president feld thet there was a of holdup and vetoed the importation ban. >> one thing people are

struggling to understand is whether you know what the itc's role is here, are we supposed to be trying to decide what's in the best interest of american business or trying to decide whether these companies have a fair claim to these patents. can you explain the different roles and how people are sort of seeing the signal that the obama administration is sending? >> yes. keep in mind, there's two avenues that you could pursue these type of remedies for patent infringement. first in the courts, the judicial branch, united states district courts and there's many battles brewing, four between apple and samsung. the international trade commission, which is -- which is an agency situated in the executive branch that's supposed to be controlling trade. that's a quasi judicial branch. here, only job not to decide money damages but only to decide injunctions. and it's a much quicker route. i mean about where it would take one year to go through itc, it

would take three years to go through district courts. it become a forum of choice among tech companies in order to secure leverage by pursuing an injunction. an nan junctive relea relief mat be possible. >> you think it adds certainty? a lot of people say it makes the situation less certain, chris. >> no, i do. okay. you have to keep in mine there are two main remedies you're after. one monetary damages, the other un une un uninjunctive relief. almost every device has a standard essential patent. if you're removing the threat of relief in these cases, therefore, that risk has also been removed. what you're going it sees a shift away from the itc, in fact, maybe in parties withdrawing current complaints at itc and moving to district

courts and pursuing traditional remedies of monetary relief. >> one thing's for sure, i'm sure attorneys will make as much money. >> i'm sure they're trying. >> one way or another. nice to see you. chris carani. meantime, 200 million people use twitter every month for free. how does the site make money? cnbc's julia boorstin joins us break down the business. >> reporter: good morning. the most important part of twitter's business is ad. designed to be integrated with regular tweets into feel-like content. the first part of their business and the most important are promoted tweets from staples for back-to-school shopping. tireses say how hutch they're willing to pay to reach a certain number of people in target audience, moms of tweens in the midwest. marketers only pay went users reply or click favorite on this within. advertisers pay less the more

engaging an ad is, which is incentive to make messages compelling. a second ad revenue stream is promoted profiles. twitter users including brands like chase and fedex pay to promote accounts to draw followers. a third ad business is promoted trends like this one for the new moto-x which grabs real estate above the list of trending topic. advertisers pay based on audience size. anyone can sift through all of the information on twitter the company sells data through analytics companies like data sift which mine for insight into customers and information on brand perception. and then bing and yahoo! pay twitter to include firehose of tweets and search result. no comment on how much money changes hand for that data. potential future gold mine are tv partnerships like the one that twit ar announced with espn which embeds clips with adds inside them. the sponsors buy a certain

number of promoted posts. another partnership with viacom to have ad campaigns around mtv and nickelodeon shows. the company's tight lipped, won't say how much money will make from the tv ad deals but is driving millions of viewers from television to twitter where they'll see ads certainly has value. >> right about being tight-lipped. they don't talk about those metrics unless they go public, in which case we might learn more if they do write an s-1. >> reporter: that's right. we expect them to file an s-1 in the next six months. they're taking advantage of the fact they don't have to reveal information about revenue or what different profits look like from the different revenue streams. nor now they're not saying much. >> yeah. we'll talk more about it this week. thank you for that. by the way, don't forget, documentary on twitter, the twitter revolution, premieres this wednesday night august 7th, 9:00 p.m. eastern time.

if you miss it at 9:00, they'll replay it at 10:00. you have no excuse. >> back-to-back. >> we're both very excited. there's a premiere at a secret location tomorrow night and we've been invited to your doc. >> secret location, 30 rock, anybody who has a ticket can get in tuesday. >> is that right, the public? in no, for people invited. but they can see it the next night. >> twice. >> yes. >> 9:00 and 10:00. >> yo. mortgage rates rise, lending standards are loosening. is this a healthy expansion for the mark or a bad habit. inside one woman's experiment into dropping social media dependence. firsthand how bad that cole turkey withdrawal can be. "squawk on the street" will be right back. [ male announcer ] come to the golden opportunity sales event

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majority of the dow components in the red. new study today finds as rates are rising people with lower credit scores are getting more loans. diana olick. >> reporter: that's right, kelly. as mortgage rates rise, credit avalibility is eating and that is no coincidence. mortgage lenders have seen a huge drop in applications and that means they have to be more aggressive about finding new business. take a look if you will. credit avalibility rose 2% in july month to month, up 3% from may according to the mortgage banks are association. increase was driven by increases in cash-out refis which had been a no-no during the housing crash, risky. but they've seen increases in offering for borrowers with higher ltvs and lower credit scores due to the drop in overall applications. they were down 47% last week from a year ago.

refis down 59%. purchase applications, only up 5%. so really not making up that difference. refis where the banks had been doing a lot of their business in the mortgage space with all of the fees involved. refis are now just 63% of all mortgage applications. during the housing crash, during last couple of years, they had been up in the 80% range of mortgage applications. on average, in addition, mortgage closing costs are up over 6% over the past year to just over $2,000, according to bankrate.com and accounting for the bulk of then crease, origination fees up 8%. as rates rise, and they're up a pull percentage point over just in may, you are beginning to see credit easing because the banks want to make more loans. back to you. >> diana olick, thank you so much for that. when we come back, time warner/cbs battle heating up and viewers caught in the cross

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an hour into trading. let's get some of the stories we're talking about. 7:29 on the west coast.

u.s. service sector companies expanding at a sharply faster pace than july. the ism nonmanufacturing number jumped to 56 from 52.2. third point reassurance says ipo of 22ment 2 million will price between $12.50 and $14.50. third point valued 1.4 billion. jcpenney name a former kraft food executive deborah berman, heading lead efforts to revitalize the brand. >> time warner cable dropped cbs stations from its systems in new york, los angeles, and other markets as the two sides have been unable to agree on transmission fees despite ext d extending a deadline several times. is there hope for resolution in future or will viewers be left in the dark? rich, good morning. thanks for joining us. thanks for having me. >> we were surprised to some extent cbs went bark in some

markets. how long will this last? >> i think it's a question for cbs. i think this is a very unique opportunity for time warner to push back. you know, retransmission consent was never intended to be used if this way. leverage and balance between broadcast somewhere multichannel video distributors that grown out of whack. broadcasters like cbs they are, by definition, free over the air broadcasters and they also put all of their content online for free but they want cable operators, satellite operators, to pay upwards of $2 per sub, per month for every broadcast chan until a given market. time warner's fighting back. the question is time warner can be dark for quite a while. there's not a lot of high value programming on cbs until middle end of september. the question, to answer your question, becomes what does cbs want to do? the longer they're dark, the greater the likelihood the government looks at this issue

and may intervene, something cbs doesn't want. the question of cbs like as to mark the lineup for the fall throughout august and early september. they're dark right now and the two biggest cities in the united states, new york and l.a. >> rich, does this reflect the changing power structure or the balance of power between the stations like cbs and the cable channels whereas maybe 10, 15 years ago, i don't know how far back this goes they may have been able to say, show us the money for us to give you the privilege of the channels and now a lot of the cable companies "times," have more of the upper hand? >>, the reality is most of the time the cable operator, satellite operator, has no leverage and they just get run over in these battles. this battle just the timing coming up in the middle of summer, where most high value programming is off the air, also this battle occurring in new york, l.a., new york is an interesting market because new york now has an alternative.

so whereas before you had to go out to a store to buy an antenna. anyone new york who want to see tiger woods could go on to the computer, click on areo.com and they could be watching cbs for the first 30 days at no cost. so people have alternatives in new york. i think that changes the leverage and balance a bit. at the end of the day by the time you get to the end of september, if cbs can wait that long, i have no doubt cbs will be back on the zblar why did you say that cbs would not want the government getting involved? what is it that the broadcasters fear that perhaps capitol hill will look again at bundling of channels? >> i think the bundling of cable networks with broadcast networks was never the intention of the 1992 cable act. look, broadcasters, you know, when you look at back to where we were in 1992, the leverage between a broadcaster and a cable operator was fairly

balanced. that balance hskewed. there's nor competition. as time warner goes bark consumers can switch. you can see consumers are saying i'll switch to directv or x, y, z. the balance of power that the law was intended originally, you know, to be involved with has shifted and that balance is so out of whack what cbs risks by going too far and pushing too hard the government looks at this and says this nose longer proper legislation. changes retransmission consent and all of a sudden cbs, counting on big dollars over the next decade to pay for rights like football, all of a sudden don't have the power they once had. >> cbs has said, look, wooe're streaming some stuff. what if they stream sports? >> what's interesting here is that cbs has gone further than i

thought they would honestly go. they've cut off all streaming of content to not just time warner subscribers in the markets affected. for f. you're a direct tv subscriber, in some other part of the country, like let's say, you know, the middle of the country, the time warner internet signal that allows you to get to cbs content has been turned off. they've not just turned off cbs.com content in the markets affected like new york and l.a. but every single time warner subscriber and that is upsetting companies like directv and others. you go further than i would have expected them to go in cutting off internet feeds. >> rich greenfield with the latest on this spat. thank you so much. we'll keep an eye on what happens from here. >> let's check where energy and commodities are shaping up after so much press over the weekend.

sharon epperson is live at the nymex. >> continuing to see pressure in oil and definitely that has a lot to do with libya regaining output. looking at libya's oilme minists talking about output up to 800,000 barrels per day. also getting word from the new president in iran, he's taking a less hawkish tone and traders say that's something that reduced the geopolitical risk premium in the marketplace. natural gas, you know it's been cooler than some expected for this time of year in many parts of country, particularly the east coast. that had an affect on natural gas prices. fell to a five of month low. down 50 cents in the past 2 1/2 weeks. what traders are doing with bullish bets for oil and gold, they're cutting them, first time we've seen that in five weeks' time. we'll continue to watch what money managers are doing with their money on the table here at

the latest commitment of trader report will start for the week beginning for tuesday. back to you. >> thank you, sharon epperson, watching the energy complex. do you think you could completely disconnect from all social media at least for a month? after the break, we'll talk to someone who is doing that now. no facebook, no twitter, no linkedin, no log. how is she surviving? "stubborn love" by the lumineers did you get my email? i did. so what did you think of the house? did you see the school ratings? oh, you're right. hey babe, i got to go. bye daddy! have a good day at school, ok? ...but what about when my parents visit? ok. i just love this one... and it's next to a park. i love it. i love it too. here's our new house... daddy! you're not just looking for a house. you're looking for a place for your life to happen.

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rodriguez will reportedly be suspended likely through the end of the 2014 season. >> good morning. how are you? yes, major league baseball expected at noon today to announce a suspension of alex rodriguez and 12 other players for violation of the league's performance enhancing drug policy. all of this in connection, of course, with the now defunct miami biogeny sis clinic. rodriguez's suspension to cover

the rest of the year and next year, that's 214 games total. and it will cost him about $34 million in salary if it takes place today. that makes it by far the most expensive suspension in the history of major league baseball. all indications are at this point, carl, alex rodriguez will appeal this suspension. that's a process that will go through an arbitrator and take a month to complete. and alex rodriguez would be eligible to play in games during that appeals process. in fact, the yankees have him pencilled into their lineup in chicago tonight apparently over the weekend, rodriguez and the players union reached out to the commissioner's office and tried to initiate a last-minute settlement negotiation but they rebuffed the offer. suspensions announced today. we'll see how rodriguez and his camp respond to it. >> incredible front page of the "new york post" sums up the

attitude, they argue in new york city, that is just go. the back, of course, one of the great headlines in the post, the banned plays on. we'll see what happens when this comes down. thanks for your time. the big story. a lot of money on the line, too, as i'm sure you know. >> absolutely. you have to wonder about the money in sports generally. relates to what we're talking about cbs. what extent is the world changing? we're starting to see cracks. 1.1 billion users worldwide, facebook and media sites part of our day life and how we communicate. going cold turkey for the month of august to see what we've gained and lost. a senior writer at "fortune." welcome, great to have you. >> thank you. >> you started august 1. >> cold turkey, makes it sound like an addiction. >> some of our cases it is. how does it feel so far? >> well, i got through the

entire "new york times" before i got in this morning. that's the first time. it feels great. it's really hard. it's really hard. >> why? you're not privileged to stuff people are buzzing about? >> somebody could be talking about me and i don't know about it. more realistically, i've covered social media since early days. i had a friend store account which you don't remember. >> we all remember. >> i've layered the stuff on. every time something new comes i try it but i don't take away the old stuff. i thought, this summer, wouldn't i be better about writing about technologies if i figured out what life felt like without them. i thought i'll go off for a month. i had no idea anybody else besides my mom would be interested. >> do you feel dumber or smarter as a result? >> dumber, i think people expect i would say this is better, witness you get over it, it's much better to be off of it. the truth is i do feel dumber.

right? turns out there are certain things i want and i want in real-time and i want to figure out how in my new life, post this detox i can get all of the things i want without the stuff that's annoying. >> people want to focus on that and concentrate on one facebook account or whatever. >> right. >> you've run into a problem which is common to a lot of people, it's kind of hard to stop when you want to stop these places are able to track you down. >> right. they do, so like i went through all of my settings, as i tell other people to do, i took off of the reminders and announcements you get over free e-mail. i took them all off i woke up to a note in my e-mail account, we miss you. >> you'll never kill facebook. i've tried several times. >> i have, too, it's true. >> years. when they say they deleted it on all servers. what is it that you need when you say you want to be connected? what is it you desperately want. >> either with a business or a

person, what i need -- >> won't e-mail or texting give you that? >> it will give plea that if i want to text and e-mail with my peers, baby boomers and gen-xors. i have a couple of teenagers in my life, it's been five days, i have no idea what they're doing and i'm not going to find out because they're not returning my calls. >> that happens. >> does it matter? >> they're teenagers. >> a lot of people, i mean there's a huge proportion of people watching you know who are not on social media. they will be fascinated the way in i which your life has speed up and communication has become rapid with people who won't return your phone call if you get the point i'm making. it changes to much. >> it does it change so much. social media, it still feels to some small subset of people it's a young person's game or entertainment. i also cover companies like ibm, using social media internally to

further collaboration and that was sprshexperimental two years it's not now. i need it back. >> pretend you can have one content back. >> i would want facebook. i'm not saying for entertainment value. i don't need to poke anybody or throw a sheet. facebook is the social, social people's network. >> carl has a twitter documentary tomorrow night. >> great long-term question, whether twit. can topple facebook which lass five time as many users. i learned about your endeavor from a tweet by you. >> wow. huh. that's reason enough i need to go back on in september. >> exactly. which you will. >> which i will. i've seen the documentary, it's great. >> thank you. we'll be watching your efforts. you're rightiwriting this for

"fortune." >> you don't have the shakes yet. >> you can't follow me on twitter or facebook but fortune.com. >> jessy, thanks for coming in. if you want the inside story on twitter from the founder, tune into the "twitter revolution," this wednesday 9:00 p.m., eastern time here on cnbc. >> coming up, we'll talk about walmart's new mission to bring back made in america. find out how the discount retail giant is trying to turn the manufacturing tide more rapidly here in the united states. plus, on the second anniversary of s&p's downgrade of america, the chair of standard & poor's global ratings committee join us live here. "squawk on the street" will be right back. [ kitt ] you know what's impressive?

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down 28 points. let's get to rick santelli at the cme. >> there is a lot of discussion, almost ad nauseam some say say as to what are the real underpinnings of the u.s. equity markets and of course when we see a dynamic to discuss this from the vantage point of the economy is doing pretty well, we get many analysts that can back

it up with fundamentals. at the end of the day it comes back to the same argument. if things are really this good, why do we need the training wheels on? we'll dig back again to try to put a sharper pencil on what really is motivating stocks, and i really do think that all roads do lead to the fed. let's start at the beginning. roughly about 21 primary dealers, why do i bring this up? it is the like it is like the goldman's, ubs, morgans, hsbcs. these entities are the only entities allowed to play in the game called pomo, permanent market operations so almost on a daily basis we see the federal reserve come in and make bids for paper, newly auctioned or recently auctioned in the hands of the primary dealers. the primary dealers give the fed securities and the fed gives them money and for the most part it is that money we want to pay attention to. this is a chart prepared by wall

street examiner. they're contributors to zero hedge, a fairly popular website. it is a great chart. we'll keep it simple. this blue line represents what we call the soma growth. what is soma? it is where all the purchases of the federal reserve, that's the portfolio, that's the part of the balance sheet, you can see them on. among other things they own, a big driver of somo balances are the mortgages and the treasuries being purchased by the federal reserve. you can see the crisis right here in 2008, and you can see the fed's balance sheet was roughly a half a trillion, and i think that is important to pay attention to for the following reason. here was basically your first qe in december of 2008. here is the price of stock. first qe, look at the stock market. second qe begins around 2010. look at the stock market. look what happens when they pause by the way. the market goes flat. look what happens to equities. qe2, equity markets and

reinvestments begin and you get another bump. qe3 settles and you go flat and qe 4 you go higher. i think it is pretty clear if you look at the blue line, especially after the credit crisis and you look at the market, that the lines are fairly synonymous. enough said, and one more thing, who does business with the 21 primary dealers? this is a close ended group. basically i know i am not getting loans and money reconstituted through arrangements with goldman or morgan. not only are primary dealers the only transmission with regard to q3, it is those with financial relationships with the primary dealer that is are in essence the entity that is are goosing the stock market. >> thank you, rick. let's send it out to josh lipton for a quick market flash back at hq. >> we're watching tyson this morning hitting a new all-time high. reports and beats the street expectations, demand for chicken and beef and sales up some 6% to

8.73 billion. that's also beat and the stock up more than 50% so far in 2013. kelly, back to you. >> all right. thank you, sir. it is tweet time. microsoft offering a $100 discount on the surface pro. the tech giant previously announcing price cuts of up to 30%. fill in the blank. forget price cuts f they really want people to buy the surface it needs to what? tweet us your thoughts at squawk street and we'll read your answers when we come back. the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95.

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want to mention where we are with priceline hitting a fresh 14 year high. this is interesting because in particular because priceline is reporting on thursday and you may have thought there could be negative follow through from what expedia anournsed a week last friday and lost a quarter of the market cap. the view seems to be you have two different businesses here, room bookings and bookings in general should be strong and of course the expedia commentary is priceline may have made gains on the huge advertising you have seen across the country this year on television, this summer, and indeed gains from trip adviser as well. this is the highest price stock now in the s&p 500 at around

$928 and a 14-year high for priceline today. >> only a handful of companies i think above 400 in the s&p, seven or so priceline one of them, google, apple and a few who and interesting what it moving it more than anything are apple and facebook, facebook hung onto 38 and added a little bit more. >> when it comes to priceline as the stock crawls closer it will get more and more attention. the question is stocks like other companies, well, do they go that route? can they get there in the first place sth. >> on the macro front a note following up on the jobs number from friday saying jobs number was a miss but ism has beaten and gdp, claims was a bit and in the words. >> microsoft offering $100

discounts on the surface pro. they said price cuts up to 30% would be taking place rt and of course that brings us to the squawk on the tweet this morning. forget price cuts. what you this is do if it really wants people to do, it would need to blank. ryan tweets they need to put an apple sticker on it. ouch. dan tweets if microsoft wants to sell the surface, they need to bundle it with a free ipad. starting to see a theme. darrell tweets advertise it as a business tool, not a toy. interesting. and jordan tweets be considered a charitable donation so buyers can write it off. not a bad idea there. >> write off is the name of the game over there. by the way, even though the dow is down and the s&p is down, russell and the nas out performing, a new all-time high for the russell. >> and it doesn't weight as heavily towards the energy names. >> and also not as weighted internationally and you still have the huge issues with emerging markets and slowing down which was again the message from hsbc today.

>> yes. we'll talk europe in a little bit and in the meantime if you're just tuning in, here is what you missed. >> welcome to "squawk on the street." here is what's happened so far. >> i don't think the fed is going to do anything between now and year end. i think the economy is going to be fast, fast, slow, slow, and right now it is slow/slow, so i don't think they'll taper. >> i would say the sectors most likely to generate debt are energy, health care, if we're serious about getting costs down, and my own sector in education where we have disastrously low productivity. >> it has become much more of a stock specific market versus a sector driven or overall market rally. people, hedge funds, individual investors are looking at stocks as an independent entity and taking them higher. >> there is no market right now for a microsoft tablet. they wrote down $900 million. they will continue to write down

inventory because people do not want the product. >> there is the opening bell. >> tax receipts are healthy. jobless claims making new lows. we're seeing various purchasing manager indices improve. the economy is not great. i headache that point. i think they're way too bearish. >> better at doing this and writing with these technologies if you figured out what life felt like without them. i thought i will go off for a month. i had no idea anybody else besides my mom would even be interested. good monday morning. let's get a check on the markets today. dow hanging in with a loss of 39 points, s&p down 1.5 or so, nasdaq with a little more, up 2 points, a retailer on a roll, costco hitting a new all-time high and goldman sachs this morning at the highest level since february of 2011. >> time for the road map. it has been two years since s&p

downgraded america's credit rating, so where are we now? s&p's chaired the global sovereign ratings committee will join us live right here at post nine. discount carrier jetblue is adding a little luxury to its transcontinental flights. it is a major shift for the airline. the question is whether it will pay off. social media stocks have seeb double-digit gains in the last couple weeks. we'll find out if it is time for the portfolio to get more social in a bit. >> two years ago today s&p downgraded the u.s. to double a plus from aaa. i am sure you remember that striking a cord from washington to wall street. >> we learned that the united states received a downgrade by one of the credit rating agencies. not so much because they doubt our ability to pay our debt if we make good decisions, but because after witnessing a month of wrangling over raising the debt ceiling, they doubted our political system's ability to act. >> so where do we stand?

john chambers is the chairman over at standard & poor's and joins us this morning and i am saying i can't believe it has been two years. good morning. the downgrade reflects our opinion that the fiscal consolidation plan that congress and the administration recently agreed to falls short of what in our view is necessary to stabilize the government's medium term debt dynamics. do you feel any differently today? >> no. i think we feel the same. we rate the u.s. debt double a plus and we're a little bit more constructive than we were before back in june of this year. we revised the outlook to stable from negative and indicating that we think that the chances of a further downgrade had reser rereceded to less than 1 in 3. why more optimistic and still double a plus? we have seen some ability of the democrats and the republicans to compromise. you saw at the beginning of the year with the negotiations over the fiscal cliff, and we see the

debt to gdp, the government debt to gdp at a federal and local government level stabilizing at a higher level than we thought two years ago and nonetheless stabilizing at 84% of gdp, that's pretty high, but we think it is going to stay there until about 2016 in which at what point the demographics begin to turn against the u.s., but that gives policymakers a couple of years to get their house in order. >> i am curious as we start to approach another round of negotiations with regard to the debt ceiling, how you guys are looking at this. it has been said in the past that what troubles the ratings firms is not even the fundamentals so much as the willingness of the government to go there, to almost trigger a government shutdown because of political inhouse. >> we're bracing for a lot of noise over raising the debt ceiling over the 2014 budget. we think at the end of the day and it might not 11th hour there will be a deal struck, that would avoid a major cash flow

problem for the united states, but this illustrates one of our concerns is simply not consistent with the aaa rating that you have to worry about this. it is a simple rule of thumb that you shouldn't have to worry about getting paid on time if you're aaa. >> of the three things to watch, right, you mentioned this nascent ability to compromise in congress. that's one piece. tax receipts look a little better, the sequester is in place and government spending in a little bit. are any of those more favorable than the other? >> i think what you are seeing on the fiscal side is a cyclical improve: also have you seen one off measures. i don't want to we little this but decapitalizing fran and i freddie is a one off measure. some of the taxes coming in are because people took gains in anticipating the capital gains rate going up. so those aren't going to be repeated. the economy is growing, but it is still growing below trend which is a little bit alarming

seeing as there is still a lot of slack in the economy. i think the things to look at are whether or not we can move forward with tax reform, the president has announced willingness to try to get somewhere on the corporate income tax. that may not give you so much on the fiscal side. it could be a big boost to growth. >> this is interesting because why should you guys have any opinion on corporate tax overhaul? except with regard to your narrow -- do you know what i mean, a lot of issues, a lot of things that will touch on revenues and expenditures in the u.s. government. why would corporate tax reform be one of your main areas. >> that's what's been put on the table and could engender stronger growth than we're seeing now because it would remove some of the distortions that keep u.s. corporations keeping their money abroad and not bringing it back here to invest. >> all i am saying is if growth is important from your point of

view shouldn't you have been saying for years now, for example, that fiscal -- that deficit reduction isn't as important as near term stimulus, for example? if growth is a focus, that i am applies a whole other set of policies. >> growth is important and there is no way the u.s. government is going to be able just to grow its way out of this deficit. there is no credible forecast for that. it is going to take a combination of adjustment on the primary side and policies, that keep growth in check, and policies at the fed that don't royal the markets. >> i don't want to put you on the spot or anything, but the way you are talking and the way you describe aaa, not having to worry about getting paid, it is supposed to be sterling credit. it is hard to imagine you upgrading the u.s. back in the near future. >> right now the outlook is stable. it indicates the upward and downward pressures are balanced. traditionally, when you look at sovereigns that have lost their triplea which there is a dozen,

five agotten them back and those five did it on an average of about nine years. >> nine years. that gives us one way of interest. thank you so much, john. i remember that day, and it is good to have you back. >> thank you very much. >> millions of time warner cable customers remain without cbs programming for a fourth day as they battle it out over fees. julia boorstin is live in l.a. >> that is one of the three markets affected and negotiations ground to a halt. cbs says they're no longer in talks, and the longer the battle draws out, the worse it is for both companies. cbs is losing out on what ubs estimates is about $400,000 per day in both retransmission and advertising fees and plus the opportunity to promote its big fall lineup. meanwhile, time warner cable risks losing describers. and time warner skabl subscribers are getting frustrate.

3.5 million people in los angeles, new york and dallas lost access to cbs on friday night including tiger woods playing in the bridgestone invitation skpl and all of the show time subscribers lost access to the premium cable channel over the weekend. the company which stands to gain a lot from this is the start up that offers live streaming tv over the internet starting at just $8 a month. time warner cable is actually suggesting that the subscribers try out ario during the blackout saying they're confident they'll still want to pay for cable. now the question is how soon the two companies will get back to the negotiating table. cbs is issuing a statement saying we asked time warner cable to continue the negotiation while programming was still on the air in consideration for our viewers. they rejected this request and told us they would have more leverage against us if they took us off their service. we remain ready to negotiate in good faith. time warner cable responding we regret the inconvenience to our customers and look forward to resolving the situation as soon

as possible. now we'll have to see whether the fcc will take action on friday the fcc issued a statement saying, quote, we urge all parties involved to resolve the situation as soon as possible. we'll see if they put any muscle behind the urging. >> this one is a doozy, no question about that. thank you so much, julia. when we come back, how walmart's push to buy more american made products could roll back the trend of offshore manufacturing. rick santelli talking markets and a little flow later on, rick. >> absolutely. i like andy brenner because he is somewhat irreverent. i like irreverent market guys. we'll talk about a slow august mean a slow bond market? we'll talk about all of this reform everybody wants to center on regarding corporate taxes. what's going to really happen with this money? i bet you andy will have an opinion and last but not least we'll talk fed and a little about supply all coming up in about ten minutes. (announcer) at scottrade, our clients trade and invest

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jetblue is about to get a little more luxurious. they're planning to add more premium seats on some of its planes. jane wells is live at the global business and travel association convention in san diego with more. have you gotten to try out one of these seats? >> no. i am still a k0e67 girl, kelly. how important is business travel? so important that jetblue is no longer going to be one class fits all, a new class of seats

is coming. >> so as you say here jetblue will unveil its new premium seats which will followed down into flatbeds and some will have sliding doors for privacy. business class is where the money is at. delta and u.s. airways forecast good growth in front of the plane later this year and delta is unveiling a business elite flatbed cabin with moonlighting, leather, inflight entertainment and expect those next spring. they say business travel in the u.s. will grow over 4% this year to $273 billion. that is just in the u.s. look out for china china is projected to grow even faster, pretty much doubling from 2012 to 2017. india business travel has surpassed canada. brazil will be the sixth largest business travel market by next year and mexico the fastest growing narcotic many north

america. elm rates looks to unveil its own seats and the "new york times" got a sneak peek into lufthans, and the real challenge, guys, is to create the seats with lying down flatbeds where you don't take up too much space. you don't want to lose too many seats to make up for folding it down like that so they experiment with all kinds of configurations. >> jean, i am sitting here trying to think through at what point we'll be able to get you on one of those jetblue seats. really appreciate it. >> apparently in coach they just stop talking in the middle. >> thanks a lot. american factories are hiring again and in fact there were more manufacturing activity in july than any other time in the last year. so today on squawk on the street

we kick off a new series made in america and we start with the world's biggest retailer, walmart, announcing plans to buy more u.s. made products over the next decade. mary thompson visited one of the super chain suppliers to see the walmart economy at work. hey, mary. >> some say it is just pr move. walmart push to buy more american made products could push back on a trend toward offshore manufacturing. in fact, you can call it the walmart economy. here in fayetteville new orders are pouring in. the factory added 60 full time jobs to produce an additional 10 million candles destined for the shelves at walmart. >> the state of our business before our partnership with walmart was very slow, dismal at best. >> last year walmart accounted for $4 million in sales at hannah's candles and now walmart says it plans to buy $30 million this year alone. by 2017 the retailing giant

projects that number will hit 45 million. it is just one of the manufacturers getting the boost from walmart which has pledged to buy $50 billion in american made products over the next ten years. walmart is partnering with highly automated company that is use raw materials found right here in the u.s., but the economics don't stop at the end of the factory line. >> this is not a put an american flag or label on a product and let it sit on a shelf. this has to be proven with customer demand and movement. >> how many more jobs might be created if walmart buys $50 billion more of american made goods like these candles? boston consulting group estimates 100,000 jobs. factories like hannah's candles generally have to update their facilities to accommodate more orders, so the push to buy american would be more viable long-term if additional retailers were to get on board.

the ceo says he is already getting calls from other outlets. >> i think it is our responsibility as manufacturers to try to keep the jobs here in america and figure out a way to do it. >> of course $50 billion is only about 10% of walmart's retail sales this year, still the initiative could be a game changer. keep in mind walmart has often been criticized for contributing to the demise of u.s. manufacturing. however, this new initiative maybe could help turn the tide even if it is one factory at a time. kelly, back to you. >> a great point, mary. mary thompson, thank you very much this morning. social stocks are seeing huge gains over the last couple weeks. is it time for the stocks to make friends with your portfolio? we'll show you how to play this sector as squawk on the secret is back after a short break. i've been doing a few things for a while that i really love-- tdd#: 1-800-345-2550 playing this and trading. tdd#: 1-800-345-2550 and the better i am at them, the more i enjoy them. tdd#: 1-800-345-2550 so i'm always looking to take them up a notch or two. tdd#: 1-800-345-2550

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welcome back to "squawk on the street." i am josh lipton. let's call it retail monday, a lot of names in this sector hitting new 52-week highs, best buy, costco, lowe's, tjx, bed, bath and beyond and pet smart and the rtm, the retail etf trading at a 52-week high. >> thanks, karl. like to welcome andy brenner. one of my go-to guys when markets need a little desiefring. andy, august down on trading floor is a time when people are taking time off, a big time off issue with regard to europe as well. do you think any of that will make a material difference in the type of volatility we have seen and let's keep this more exclusively towards the fixed

income markets which have had a touch of volatility, just think this past friday and a month ago the day after the fourth of july. >> with august and september, not great months for equities and as far as fixed income goes a lot of players out as you say and everyone knows the fed will taper, whether it will be september or whether it will be december, it is going to happen. we're going to higher rates. you tested 274, twice in ten years, once at last month's unemployment number and once right before this past month's unemployment number and you get down there a third time and blow through it and probably going to get to 2-7/8, maybe 3-1/4. >> i like that. i saw many of the media making a big deal about the volatility coming down but net net what i saw was 11 basis points lower. if i go back a month to the july 5th read, when we had an equally

strong report, we had a settlement of 250 and on the fifth hit the high water mark at 2.74. we get a bigger response on interest rates on strong data than takebacks on weak data. i think it is important. what say you? >> absolutely. no question about it. since the fed started their qe3, everyone looks at it as being the god savior. have you gone from 1/5/8, three quarters when they start and now 2-5/8 and 3/4 now. the market is looking at the tapering. it is not looking at qe anymore. the fed might as well get out of the way. we're going to higher rates and it is just the end of it. >> dhs going to be a big watershed moment. as i showed, if you look at the portfolio, and you look at the permanent market operations, equity still respond to the upside even though interest rates don't.

last topic, everybody talking about the benefits of corporate tax reform. i agree. any kind of tax reform is huge. you know, most of the time it is nibbling at the edges. here is my question. okay, we bring back all of this money that's overseas and everybody saying it is the cure for all that alz us. why is this money going to do anything different than all the money sitting around right now not necessarily generating jobs because investors are skiddish. your thoughts? >> rick, if they do it, and without really having it an end goal, it is exactly what's going to happen. if they somehow link that money coming back to jobs being created in this country, then i think we'll have a positive aspect. we have the highest corporate taxes in the world except maybe one country. we have to reduce it. we have to make it more economical and more refined. >> andrew, thank you for taking the time on this kind of lazy monday morning. >> let's get over to the nasdaq

and saying a look at blackberry. >> staging a major come back. images of what some blogs are alleging could be the next generation blackberry handset, seems to be catching the attention of wall street and keep in mind roughly 30% of blackberry's outstanding shares are short so some traders are suggesting that this could be short squeeze. shares up better than 6% on the day. kelly. >> great. we'll keep an eye on that one. just a couple minutes left to go in europe's trading day as we await the close and we'll take a look at the surprisingly strong economic data out of the region lately. a lot of people asking the question has europe turned the corner, that's coming up in squawk on the street comes back. ♪

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down. the big question we're focused on really in europe is whether or not we bottom there economically. now, the data from u.k. was strong for the services and we concentrate on the rest of the eurozone, the 18 countries which are five times the economic power. it is really what we're focused on for earnings on both sides of the atlantic. more survey data is suggesting we may have bottomed out. a final reading on the composite pmi, that's manufacturing and services, revised slightly higher into expansion territory, above 50 as you can see and it is perhaps weighted more towards manufacturing there and investors sentiment doing great guns or much better than it was, broadly because of the recovery in france and southern europe. germany still very much a pillar of strength in that overall index as you see. retail sales are soft for the first time fallen for three months. there is a very active debate which in a couple of minutes on the show we will pick up about whether or not we can talk now

about growth in europe in the third quarter. of course the equity market in europe has begun to pull away during the course of the last one month, a big article in the journal today about whether or not you should perhaps be by verse if iing increaselying into europe and whether you get better returns in the next 2we68 months there than here in the united states and rebalancing the portfolio and goldmans is there and ubs less pessimistic. we'll talk about that in five minutes. >> thank you very much. let's bring in bob with a look at what's moving at the big board. hey, bob. >> pretty good morning for economic news. ism services better than expected. let's call it two out of three so far on the july economic numbers. put up the full screen. the ism services numbers, that beat number one. number two, ism services numbers beating and now the non-farm payroll, well, that was a miss. a little bit of a problem here, something is wrong because the employment component of the manufacturing and services were pretty good, suggesting we

should get expansion on the payrolls and so somebody is wrong here. that's my point. who is right, the ism is seeing employment expanding and non-farm payrolls are below expectations. this will be resolved in the next few weeks and obviously i think that the ism numbers are very important for the sentiment overall. one good thing about today, higher rates aren't dramatically affecting the stock market. there is the ten year yield. it is up about five, almost 6 basis points in the past. that's put pressure on the stock market. not really happening today. take a look at the dow industrials. once again today if it wasn't for the crummy performance of big oil, we would be almost positive, not quite, but almost positive on the dow industrials. again today exxon and chevron are the laggards, exxon down about 3% last week, a real drag on the dow. both had disappointing earnings and big oil in general has had disappointing earnings and production levels down and growing is a big problem for those companies right now. home builders lagging a little bit today and down about 2%, a pretty good week last week.

i think the reason the builders are down today is fastenal had the monthly numbers out. they're a big company that provide a lot of little things like nuts and bolts to construction companies and industrial companies and fast fasteners and hardware supplies and the same-store sales down 2.9%. that was below expectations, a lot of people had 5% as you can see fastenal down about 2%. finally a fairly good day in health care. this is why the market is so healthy overall. you get disappointments in areas like energy, and other areas sort of come in and make up for it. you have this well-balanced stock market and health care up one day and energy stocks down and then reverses the next day. back to you. >> thank you so much, bob, watching what's moving. getting headlines and the fed is closer to dialing down bond purchases, no reversal and

economic momentum and also saying the central bank has a monetary knot to untie and the fed will have to move gingerly to avoid wreaking havoc on the markets and the qe in his view has not achieved much in terms of job creation. >> and what's happening may have less to do with how the macro picture is evolving and more to do with concerns fisher have about its impact. >> if it is a gordan knot, it is a gordan knot they're making. >> i think keith would argue that. >> there are signs of strength across the pond in europe. the eurozone manufacturing pmi hit a two-year high and the u.k.'s a 28 month high and better news on the service sector front. with good news on growth and nothing to suggest centralbacks aren't getting more hawkish is the time to add more europe to the portfolio. let's bring in paul donovan, global economist and managing director with ubs.

simon hobbs is joining the discussion as well. good morning. >> good morning. >> paul, i would like to start with you and just ask is the sentiment over there that europe has bottomed and when we talk about bottoming, do we have to differentiate between economic activity and the stock market there? >> i think you always have to differentiate between economic activity and the stock market. we have to remember about 70% of the private sector economy in the euro area is small businesses, what's called the metal stand over here and you call mom and pops. they're not quoted on the stock market and have a far worse recession than the large companies, so there is a difference. i think for both parts of the economy that's to say the listed companies and the small business sector we have to the stage where things can't get any worse, and so therefore they're getting somewhat better. it doesn't mean we're back to trend growth, very, very far

from it. it means that we are ended the period of negative economic growth. >> would you agree with that? >> i certainly think we have seen quite a remarkable turn around in the up and pmis, of course a stronger outcome in the u.k. than your area. when you look at the european economies and the turn around in the last few months is certainly impressive. now, i would certainly agree with paul, doesn't mean just about to still see economic growth but just means we get to the point and where we are likely to see some improvement in the second half. >> do we need to worry about kind of systemic shocks any more or fully insulated on that now? >> i wouldn't say we're fully insulated. i think that there are still some troughs ahead and the fiscal problems by no means dissipated. and europe is squabbling still over how to do the most basic

structural things that accompany a union like have a banking union. there are still plenty of political risks and noise and what i think we have avoided and what we will avoid going forward is the risks that we saw surrounding greece. i don't think there is an existential crisis in the euro ahead. i don't think people will question euro stability and the way they were doing two or three years ago. >> jenn, what people really want to do is should they be investing in european markets? obviously ubs has slightly more upbeat and goldman a far better return than the u.s. markets over the next year or so. what do you think? i know your economist is not primarily what your subject matter is. what's the general feeling? >> i would put it this way. there is no one i talk to who isn't aware of the strengthening of the u.s. outlooking over the last six months and isn't aware there is a good economic news story to be told in the u.s. and the corporate outlook in the u.s. is pretty robust.

i think when i try to explain to them that the spanish and the italian outcome is improving on the domestic front and also for the spanish and italian corporates that are exporting, that that outlook is improving and that matters, and i think that is much harder story and i think a story still about to be discovered. so if you want my opinion on that, i think there is potential in europe. i think there is potential and compared to where we were six months ago where we weren't talking about existential threats but certainly a much prolonged recession and now in a recovery mode and very modest recovery. it is a very different conversation about the corporate in the area in those circumstances. >> the other day we celebrated. that might be too strong a word. we marked the anniversary of draghi's laying down the law saying he would do whatever it takes. how much credit does he deserve for that? where would europe be if he had never said that? >> i think if we hadn't had that

open ended commitment, then the risk premium in europe would have been a lot higher. we would have had more problems at a difficult time. by making it clear the ecb was prepared to put unlimited amounts to work to avoid the systemic failure, i think that was an important step. however, it doesn't solve the problems of the euro and i think what we have to focus on now that we are putting the negative gdp episode behind us is how do you get back to an environment where we actually create positive economic growth? how do we get back to an environment where we are reversing to trend? and draghi doesn't have the answers to that because he can't have the answers to that. they lie in the political fear, not in the central bank sphere. >> we'll leave it there. >> have to go. appreciate your views and we'll come back to both of you as we follow this narrative. >> in less than 30 minutes from now major league baseball expected to suspend alex

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find out how a top technician says the s&p will march to a new uncharted level and qualcomm falling on a downgrade from the street. should you bet with the analysts? our traders will debate that at noon. we'll see you in a bit. yankees third base man alex rodriguez expected to be suspended through the 2014 season for using performance-enhancing drugs. it was thought the announcement was maybe a few minutes away. we're getting word it probably won't come until later this afternoon. a-rod's face as you know is plastered all over the papers here in new york especially as the cover of the "new york post" saying just go. he is expected to immediately appeal the ban and he may even play tonight against the chicago white sox. you know the subject well. nbc sports tweeted a few moments ago that a-rod's legacy has not been tarnished today. it was ruined a long time ago.

what are we to make of today? >> i think today is really a culmination of years of use on the part of alex rodriguez. i think that finally he got caught. the evidence is overwhelming from what everybody understands about what major league baseball has on alex, but i think it is the end of the road. he may have a few games here if he is going to go through with the appeal and doesn't have ab 11th our decision to take the medicine, and maybe that gives him a few more days in the limelight, a few more days to control the mess i think ultimately is over for him. >> from an ethics standpoint, obviously the announcement is not out yet but do we start making big broad comparisons to pete rose? ? i think it is different from pete rose. obviously pete was involved in violations that led to his lifetime ban under the best interests clause and that the commissioner has, and i think this is a bit different. this involves actually giving you a competitive advantage on the field. it is a very strong economic

incentive to do so for all the players to land the bigger contract and make it in the big leagues in the first place for less talented players so i am not sure there is a great comparison other than the fact they both violated rules of major league baseball. >> what about the earnings specifics when it comes to alex rodriguez now? how much of his income is potentially at stake and what does this decision mean for all of that? >> sure. the player will not bet paid during any suspension from major league baseball, so if what the tea leaves are reading and what we're seeing is correct, we're looking at a 214 game suspension and remainder of the season and all of the 2014 playing season, it would cost rodriguez about 35, $36 million, he would also see the potential then for any remaining sponsors to walk away as well from any existing contractual obligations they may have with rodriguez. >> that's interesting. you're saying most would have clauses or something that is triggered if the suspension goes down where they're able to walk away? >> like a lot of high priced

talent, they will have morals clauses that are part and parcel that far contract that will stipulate various terms upon which the contract can be voided, and for a player like alex rodriguez who has drug speculation following him for a long period of time, you would expect that that would be part of any contractual relationship he might have with any company. >> salina, is it possible that this delay that we're seeing even though it is apparently just a matter of a few hours is a sign that negotiations are taking some turn behind the scenes right now? >> you know, it wouldn't be surprising. it is a good point that the longer this goes, the more opportunity alex has to have a second thought about this or perhaps take a suspension that is more on the order of maybe 100 to 120 games instead of the 214 games to try to save a little bit of the end of his career. i think the one thing alex wants is a chance to end it on his terms in some way and maybe he

has taken the opportunity now to try to make it easier on him in the pocket. he has a big lifestyle. he lives an incredible lifestyle. >> do you think that if it hadn't been for just thinking back in recent memory, annoying cash man with some talk about coming back earlier than people thought, seeing your own doctor apparently in violation of some union rules or league rules, if those things hadn't happened, would he have as easier path today. >> he may have an easier path. i think it is still about major league baseball demanding more of its players and to be honest when they are brought in for questioning and i think he has a long history of lying to major league baseball and obstructing the investigation here in this case and i think if this is really about major league baseball and certainly if it helps to irritate your employer by saying things that really, really, you're looking at possible insurance payments in question with some of the things alex has said and i think the

yankees were right to be irritable and irritated by what he is doing. >> right. finally, scott, i am just wondering nfl season kicks off a month from today. what kind of grade would you give major league baseball in dealing not just with the a-rod issues but the other names that surfaced over the past ten or 15 years? >> i think you have to take it in context. major league baseball has made tremendous strides in the drug testing program in the last ten years going back to the 2002 collective bargaining agreement. i think it is a longer part of this is a big part of a much longer process that we're seeing that involves the relationship between the major league baseball players and their union and major league baseball management. and so this is an important moment but it is part of a much longer evolution. >> good to talk to both of you. thank you so much. >> social climbers can help pull you up and also step on you. we are not talking about people but rather stocks. you can find out who likes

facebook, which you can trust as the sector spikes when we come back.

the latest buzz on social media is about social media stocks themselves or at least among people we talk to. facebook shares hitting a 52-week high after closing above the price of $38 last week.

linked in shares more than doubled in the last year and they're kushtsly trading at $231 you can see there. a bit lower on the day and the broader question is why are they climbing so high and can it continue? beal bring in collin sebasten and also joining us gene münster from piper jaf fray. thanks for your time. collin, a lot of people buzzing about social media. in your space how well are these companies doing and who do you think is best positioned here? >> well, i think that you mentioned both facebook and linked in. both of these companies have massive gravitational pull from both the user and content perspective, and they are genuine platforms. they're not dependent upon search engines or other sites for traffic. certainly those two are standouts in the social media field. we would also point to google. while they're not specifically a social network, they have

tremendous amount of social data and personalized data that they're monetizing as well. >> and, gene, from your point of view, is this a story of suddenly waking up and realizing that facebook can monetize mobile and maybe everyone else can, too, or has this been building in the background for some time? >> that's a big part of it. more recently with the june quarter results but today we have a note out where we outline the opportunity in video and as well as instagram, two areas they haven't started to monetize, so when you think forward, it is all part of mobile but there is impressive new opportunities they have, so you have to start thinking about 2014 and maybe even 2015 at this point. >> let's talk about some of the leadership, the managers here, zuckerberg, weiner over at linked in and larry paige and i wonder in terms of their performance and their ability to see around strategic corners, is one outpacing the rest of them? >> i don't know if we can say

that at this point. they're both in similar markets, but in different trajectories and each i think distinguish themselves as having created massive platforms as we discussed, and so i think larry page in terms of initiatives in browsers and search and display is doing a phenomenal job within the human capital category, obviously linked in doing exceptionally well and taking big market share and facebook, i would say perhaps the common denominator with the others may be a focus on technology, really strong engineering sophistication that distinguishes these platforms from a lot of other companies. >> colin, there is a lot of focus in the space that on valuation now. especially after the rallies we have seen and linked in getting the headlines on this trading at better than 100 times next year's earnings. what is the basis for buying into the sector? >> well, i think if you were only looking towards one year forward earnings, that might be

missing some of the larger trends. there is a lot of -- a network effect happening and user growth is still happening, and monetization is improving, and those have a multiplier effect. as gene said, looking out to 2014 and beyond i think is important to truly valuing the intrinsic value of these companies. >> if that's the case do you have to watch the news flow and the earnings season for these guys and understand it is a web in that sense, that if facebook does well, this he all do well and if one has a bad quarter, look out for everyone? >> well, i think it may be different than that. i think what's going on, they're thematic sorries, both facebook and linked in and for linked in specifically the recruiting market is a $27 billion market in the u.s. linked in about a billion and a half market cap. they have a straight shot to really taking over and transforming that industry and so the good news for investing in the stocks despite the fact they have is had wild runs is it is more a thematic play.

linked in is probably better positioned versus facebook because facebook there is still concern been gaugement around teens and what have you, and in general it is less about quarter to quarter and more about the theme. >> okay. and the theme right now is working for this space. colin and gene, thank you for your time this morning thank you. >> speaking of social networks, the guy sitting to my right has a twitter documentary about to hit twitter revolution appear this is wednesday, august 7th at 9 p.m. eastern. you put a ton of work into this. i can't wait to see it. >> and a long hard road, looking forward to putting it on the air wednesday night. microsoft is offering a $100 discounts on the surface pro and the tech giant previously announced price cuts up to 30% on the rt. fill in the blank. forget price cuts f microsoft wants people to buy the surface it needs to blank. tweet us at squawk street. you're answers are now. [ male announcer ] this store knows how to handle a saturday crowd.

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and schuman writes if they want to sell the surface, advertise how well it skips across water. splash. >> blackberry is a popular fruit. >> interesting marketing ideas. dow is stubbornly down 50 points. we'll see what happens this afternoon. >> and and back to headquarters and scott wapner and the halftime. >> welcome to the halftime show. four hours to go until close. down across the board right now. there is the nasdaq and it is down two. here is what we're following on the half. the road to 2,000, some on wall street say that's where the s&p and heading. we'll tell you where we get there. chipped or broken, qualcomms under perform the market and is a turn around in the cards? one trader says yes and another no which means we will debate it just ahead. the top story, follow the money, new numbers showing a record